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UI had negotiated with the company for fixed 25LPA salary. In the offer letter they have shown provident fund as part of base fixed pay. Should that be included in it? Doesn’t this reduced my fixed salary as it is only bloating the total fixed salary? I can provide break up as:
Basic: 1000000
Flexible pay: 1380000
Pf: 120000
Total fixed pay: 2500000Here thay have added basic+flexible pay+ pf
Can anyone help if this correct to do or not?
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AThere is a difference between base pay and fixed salary. Fixed salary includes company shares of PF. There will be an employee share of PR which will be deducted later once you start receiving salary. PF depends on your base pay that’s why it is part of fixed salary. And you always negotiate that way.
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UGoing a little off topic here.
Firstly get a clarity over what this flexible pay means? to me it looks like a fancy term for variable pay because companies usually write xyz allowance (HRA, Travel, Conveyance, etc).
Check if it will be paid monthly or at the end of the year? and also check if there are any caveats around this flexible pay such as need to spend x number of years with the company, etc.
if it is indeed variable pay, your fixed component becomes only 11.12 Lakhs, of which your 2.4 lakhs go to government as PF contribution (employee + employer), leaving you with 8.8 lakhs before tax.
one more thing you should note is that when you switch jobs in future and you share this CTC structure, HR may consider this flexible pay as variable pay.
Now coming to your question, the 1.2 Lakhs of PF mentioned is employer’s contribution and yes companies consider it to be part of CTC. Also, as already mentioned, the total amount that will be paid to PF will be 2.4 lakhs. Remaining 1.2 will be taken out of basic of 10 lakhs.
hope this helps.
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